There are 2 main types of non-tax paying company available in Gibraltar:-
THE GIBRALTAR TAX EXEMPT COMPANY
A company incorporated in Gibraltar which is owned by non-residents of Gibraltar and does not transact business with other Gibraltar resident companies or individuals is eligible to apply for tax exempt status in Gibraltar.
Upon successful application issued with a certificate which guarantees exemption from Gibraltar taxation for a period of 25 years provided that the company complies with the conditions of tax exempt status and pays an annual duty to the Gibraltar Government of € 370.00 p.a. At the end of every year the exempt company must file a statement attesting to the fact that the company has complied with the conditions applicable to its exempt certificate.
An exempt company is convenient to administer due to the fact that it may have locally appointed directors and may maintain Bank accounts within Gibraltar. Thus the whole of the administration may be located within Gibraltar which helps to prevent the assumption that the company may be tax resident anywhere else.
NON-RESIDENT GIBRALTAR COMPANIES
A company which is incorporated in Gibraltar, owned by non-residents of Gibraltar and managed and controlled by directors who reside and hold their board meetings outside of Gibraltar will be considered as non-resident.
A non-resident company is not subject to Gibraltar corporation tax except on that part of the profit which is remitted to Gibraltar. In practice this means that a non-resident company may be totally exempt from Gibraltar corporate taxation provided that it does not maintain Bank accounts within Gibraltar.
TAX RESIDENT OR EXEMPT?
The non-resident company is cheaper as it is not subject to the fixed rate annual duty and other fees which are payable by the exempt company (see fee comparison below) but it is generally less convenient to manage due to the requirement to appoint non-resident directors and maintain Bank accounts outside of Gibraltar only. This may have tax implications in the home country of the directors - please see our notes on directors under the “Optional Services” section.
In a world of ever changing fiscal legislation the 25 year guarantee enjoyed by the exempt company may prove particularly useful in the future.
In addition to the above types of non tax paying companies Gibraltar offers two further types of company structure which may be extremely useful in a tax planning exercise:-
THE GIBRALTAR QUALIFYING COMPANY
This type of company is similar to the exempt company but, instead of being non tax paying, the company elects its own rate of tax as long as that rate is 2% or above. This type of company can be useful where it is necessary to show that a certain minimum level of taxation has been paid in order to gain relief from taxation in another country. For example, the taxation systems of certain countries provide that if taxation above a certain minimum level has already been paid on income remitted to the home country then no further taxation will be charged on those profits by the home country. The qualifying company can therefore elect to pay the required minimum level which would allow that income to be remitted to the home country without further taxation being suffered on arrival.
A Qualifying Company must lodge an amount of €1,640.00 with the Gibraltar Government as a guarantee against payment of future taxation.
THE GIBRALTAR 1992 HOLDING COMPANY
This company was specifically created to take advantage of European Union Directive 90/435. In simple terms, this Directive states that dividends may be paid by a subsidiary company located in o0ne EU state to a parent company located in another EU state without the imposition of withholding tax as long as the recipient parent company is not capable of being exempt from tax. The prohibition against tax exemption would mean that the exempt and non-resident Gibraltar companies are not suitable to receive dividends from a subsidiary in another EU State so the 1992 Holding Company was created. The 1992 Holding Company pays 35% tax on all profits except on dividend income received. Dividends paid out of the 1992 Holding Company are subject to a 1% withholding tax. This type of company can be particularly advantageous for non EU countries who are investing within the EU and are expecting to receive dividend income. As can be seen the effective rate of tax on that dividend income will be 1% when remitted out of Gibraltar or zero tax when held within Gibraltar.
The fee schedule below does not quote fees for 1992 Holding Companies as the procedures involved are somewhat complicated and can only be quoted on a case by case basis.
gibraltar companies have the following characteristics:
TAXATION |
For details of taxation please see the heading applicable to the relevant type of Gibraltar company. |
SHAREHOLDERS |
Gibraltar companies must have a minimum of one shareholder who may be corporate or individual. Details of shareholders appear on the public file but anonymity can be preserved by the use of nominee shareholders. Bearer shares cannot be issued. |
DIRECTORS |
Gibraltar companies must have a minimum of 1 director who may be corporate or individual. Details of the directors appear on the public file but anonymity can be preserved by the use of third party directors. |
ANNUAL REPORTING |
An annual return must be filed each year showing details of shareholders and directors. Exempt and non-resident companies do have to file audited accounts fo the public file and the Qualifying 1992 Holding company also need to prepare audited accounts for the Gibraltar tax authorities. See also Accounting Requirements. |
TIMESCALE |
Companies can normally be incorporated within 5 days but on payment of a premium the incorporation time can be reduced to 24 hours. Ready-made companies are available for immediate purchase. |
ACCOUNTING REQUIREMENTS |
With effect from 1 April 2000 the Gibraltar authorities introduced a change in company law which requires all companies to file annual accounts. However smaller companies, those with an annual turnover of less than £4.8 million, will generally be exempt from the necessity to have the accounts audited and the need to file full financial statements. The accounts must be filed with the registry within 13 months of the end of the financial year and failure to do so attracts a penalty of € 164.00. Failure to pay the penalty within one month will leave the company open to further prosecution. Clients should consider appointing ICSL as their fiscal agent. As fiscal agent ICSL will provide bookkeeping services to the company for an annual fee of € 450.00. ICSL will also prepare the annual accounts on a time/cost basis but with a minimum fee of € 245.00. |
RESTRICTIONS
ON NAME AND
ACTIVITY
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The following words and their associated activities are restricted: association, royal, imperial, trust, trustee, bank, assurance, group, Europe and international. |
LOCAL REQUIREMENTS |
As a matter of local company law the company MUST maintain a registered office address within Gibraltar. Additionally, it is a requirement, practical in the case of a non-resident company and legal in the case of the other types of Gibraltar company, for a Gibraltar resident company secretary to be appointed. We would generally provide these services as part of the domiciliary service fee. |
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